Drafted half this last night, and have kind of lost the thread a bit, and can't really recall all the stuff I intended posting. And can't be bothered going back over RTD's voluminous posts to cover everything, but this is just a few thoughts about surge-pricing and its applicability to the trade etc.
RTD wrote:
There is an argument that Uber does price gouge. But again this is down to supply and demand.
If they had enough drivers on the road the prices would not increase significantly. It's required to meet demand.
If enough drivers get on the road the price decreases and an equilibrium is met.
Correct me if I'm wrong, but that's what they call neoclassical economics?
But the other side of the market clearing/equilibrium model is that customers are paying significantly higher, and at times huge multiples would be required to balance supply and demand.
Which is why I think your preferred model simply isn't going to happen anytime soon - the chances of regulators deregulating hackney carriage fares in the near future are less than zero, in my opinion, because early hours undersupply is going to get worse in the short- to medium-term, I suspect, which is when the women's safety stuff and suchlike comes into play, so policy makers simply aren't going to let it rip anytime in the near future.
Ditto regulation more generally, and although I think some of the ULEZ and CAZ stuff is well over the top, and obviously happening at the worst possible time, the chance of any major reversal in that regards seems limited (although I suspect there will be a stay of execution for many until the wreckage of the pandemic becomes a bit clearer).
Which in turn raises another big question in relation to your several thousand words about the 'taxi' industry. Do you mean hackney carriages, private hire, or both?
But as regards your promotion of a surge-pricing model, it's perhaps worth pointing out that (I think) all 350+ UK councils have different HC tariffs for unsocial hours, and some have them for weekends and 'party' tariffs applying after midnight (say), and on public holidays. And all have them over the festive period, as far as I know.
So that's a form of surge-pricing, although very crude, obviously, and certainly not dynamic in the sense of Uber's.
But there is an element of dynamism in even HC fare-setting in that discounting is commonplace in some areas. Which of course is the opposite of the dynamic, market-clearing surge-pricing approach you're advocating, but to a degree it's just the market introducing a bit of price-flexibility where council-regulated HC tariffs are set above what might be called the market equilibrium rate.
But in turn that maybe points towards the competitive nature of the market, at least in some areas, but which perhaps indicates the limited applicability of surge-pricing, and why other firms haven't adopted it, at least to the extent that Uber has (of course, historically the technology simply hasn't been available to support a fully dymanic Uber-style pricing model). And, of course, a crude surge-price model in the form of unsocial hours premiums etc has effectively been the norm for years, as mentioned above.
But at least one major provincial operator recently trialled surge-pricing, but gave up fairly quickly because of customer complaints. But didn't Boro Cars introduce a fixed surcharge at busy times which customers could use to effectively jump the queue and get priorty service? Again, that's not surge-pricing, but is a further refinement on the unsocial hours premiums.
But to be honest I find it difficult to get my head round Uber's surge-pricing model and how that works in terms of customer loyalty etc. But I suppose a small proportion of customers are largely price-insensitive, and will pay the price simply to secure a care immediately when they can't get one elsewhere. And while Uber may take a hit in that regard as regards customer loyalty, maybe they just think that's a price worth paying (pardon pun), while on the other hand, as a major brand they know that they can at times charge a premium price and get away with it.
But maybe the surge-price model not so easy for the more traditional providers, even assuming they have the software in place to handle dynamic pricing. Another constraint may be that traditional PH providers are competing with HCs, which obviously can't surge-price beyond the regulated tariff, whether on the ranks, or on circuits.
Moreso when PH and HCs are working on the same circuit - they can't have PH surge-pricing while HCs doing the same pre-booked work are constrained by the council-regulated tariffs.
As for airlines and the like, it's of course worth pointing out the existence of the Ryanairs and EasyJets of this world, which while are no doubt good models in terms of dynamic pricing, aren't really compatible with premium pricing per se.
And, of course, the history of the airline industry hardly demonstrates an object lesson in stability and consistency, so there's maybe a lesson of sorts there.
But, who knows, there may be a place for more dynamic pricing in the future trades, with Uber blazing the trail, and helped along by the adoption of the relevant technology.
But in the meantime I tend to think of pricing in the trades more in terms of something like restaurants, which may charge more at Christmas time, say, but their pricing isn't really dynamic in the Uber sense.